<![CDATA[ITEM 8. Other Events
Acquisition of Memorial Insurance Company of America.
On July 22, 2005, Security National Financial Corporation (the "Company")
entered into a letter of intent with Memorial Insurance Company of America
("Memorial Insurance Company"), an Arkansas domiciled insurance company, to
purchase all of the outstanding shares of common stock of Memorial Insurance
Company. Under the terms of the letter of intent, the stockholders of Memorial
Insurance Company are to receive $13,500,000 in consideration for all of the
outstanding common shares of Memorial Insurance Company, with each stockholder
to receive a prorata share of the total amount of the purchase consideration.
The stockholders are to receive a total $13,500,000 for their shares by means of
capital distribution, stock purchase, stock buyback, or similar transactions,
with the Company simultaneously contributing sufficient capital and surplus to
Memorial Insurance Company to maintain its status as an admitted insurer in good
standing in the state of Arkansas.
As of December 31, 2004, Memorial Insurance Company had 100,170 policies in
force and 50 agents. For the year ended December 31, 2004, Memorial Insurance
Company had revenues of $5,219,000 and net income of $2,267,000. As of December
31, 2004, the statutory assets and the capital and surplus of Memorial Insurance
Company were $45,065,000 and $13,411,000, respectfully.
Contemporaneously with the completion of the transaction with the
stockholders of Memorial Insurance Company, the letter of intent requires
Memorial Insurance Company to coinsure substantially all of its business to the
Company. The coinsurance agreement is required to have terms standard in the
industry for such agreements, and is to include a tri-party collateral provision
regarding the assets funding the reserves. The parties to the coinsurance
agreement are to consist of the Company, Memorial Insurance Company and the
Arkansas Insurance Department. Any future insurance business by Memorial
Insurance Company will be covered by this coinsurance agreement.
Additionally, Memorial Insurance Company agrees in the letter of intent to
make its marketing sales personnel available to the Company for hire. Moreover,
the Company agrees to maintain the corporate offices of Memorial Insurance
Company at its current location. The Company anticipates completing the
transaction no later than October 30, 2005.
The obligations of the Company and Memorial Insurance Company to complete
the transaction are contingent upon satisfaction of the following conditions:
o A complete and satisfactory review by the Company of the books, records and
business of Memorial Insurance Company, with such review to be completed by
August 12, 2005.
o Execution and delivery of a definitive agreement between the Company and
Memorial Insurance Company;
o Approval and adoption of the letter of intent by the Board of Directors of
the Company and Memorial Insurance Company;
o Approval of the transaction by any regulatory authorities having
jurisdiction over the Company and Memorial Insurance Company, including the
insurance departments of the states of Arkansas and Utah;
ITEM 9.01. Financial Statements and Exhibits
(c) Exhibits
10.1 Letter of Intent between Security National Financial Corporation
and Memorial Insurance Company of America.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SECURITY NATIONAL FINANCIAL CORPORATION
(Registrant)
Date: August 10, 2005 By: /s/ Scott M. Quist
--------------
Scott M. Quist
President and Chief Operating Officer]]>
